THE Department of Energy (DOE) targets to issue in the third quarter of this year a new policy declaring all renewable energy (RE) plants as preferential dispatch units in the wholesale electricity spot market (WESM).
During the second day of the 1st Renewable Energy and Energy Efficiency (REEE) Summit organized by the Meralco Power Academy, DOE Renewable Energy Management Bureau (REMB) Director Mylene Capongcol said the agency is currently studying and pushing for this.
At least two public consultations, in fact, were already conducted on the draft department circular (DC) on preferential dispatch. “The proposed DC is targeted to be promulgated on third quarter of 2022,” she said during her presentation.
The DOE has collaborated with Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) and the Institute for Climate and Sustainable Cities (ICSC) for the conduct of a study on RE priority dispatch. Based on their evaluation, Capongcol is certain that declaring all RE as preferential dispatch will definitely help reduce electricity prices.
“The initial result was quite encouraging. It provides cheaper market price for those in the grid or those that have WESM. Because of that study, we might issue a policy that might be two prong. We will start with geothermal and biomass as priority dispatch and then we’ll move towards other RE like impounding hydro so that the dispatch of the market will be coming from those RE technologies,” Capongcol said.
When asked which RE are now labeled as priority and must dispatch, Capongcol said solar, wind and run-of-river are must dispatch while FIT (Feed-in-Tariff)-eligible biomass is preferential or priority dispatch. “We intend to cover all RE,” she stressed.
As per DOE, priority dispatch means giving preference to all qualified and registered RE plants that are not must dispatch, such as biomass, geothermal and impounding hydro plants. Previously, only biomass under the FIT system was included.
For must dispatch, the DOE said this “facilitated in the WESM by qualified and registered intermittent RE-based plants, whether or not under FIT system, such as wind, solar, run-of-river hydro, or ocean energy, according to the preference in the dispatch schedule whenever generation is available.”
The DOE said both are collectively referred to as preferential dispatch generating units.
“Must dispatch is the first to be dispatch in the grid. Any generation from solar, wind, and hydro will be scheduled and dispatched among all technologies whether RE or non-RE. Mostly, these are variable RE. Then next is the priority dispatch,” Capongcol explained when sought for comment.
During the summit, the DOE and the ICSC pointed out that RE sources best suit the country’s power generation needs.
“Renewable energy can definitely compete with coal. In the renewable space, you only pay for the cost of developing, and naturally, the supply is available for use. This is why the DOE is looking for strategies to buy down the cost of RE in the country, not just in the investment side but also for the consumers,” said Capongcol.
RE sources, namely, geothermal, biomass, hydro, solar, wind, and biofuels, have contributed a 21.2- percent share in the country’s total power generation in 2020. To maximize the potential and advantages of RE, the government is targeting to increase its share in the Philippine energy mix to 35 percent by 2030 and more than 50 percent by 2040 through its updated National Renewable Energy Program (NREP).
To help achieve this, the DOE has implemented policies such as the Green Energy Option Program (GEOP) and the Renewable Portfolio Standards (RPS) to give it the much-needed boost and jumpstart further RE activities.
The RPS a policy mechanism under Republic Act 9513 or the Renewable Energy Act of 2008 mandating distribution utilities and retail electricity suppliers to source or produce at least 1 percent of their power supply from eligible RE facilities.
The GEOP is a voluntary RE policy mechanism, which provides end-users the option to choose RE resources for their energy requirements.
The agency is now preparing for the Green Energy Auction Program (GEAP) and RE Trust Fund. It also recently promulgated the Waste-To-Energy Development.
Meanwhile, ICSC energy transition advisor Alberto Dalusung III presented the findings of the report entitled “Toward an Affordable and Reliable Grid with Energy Transition” (TARGET).
The TARGET report is an output of the Clean, Affordable, and Secure Energy for Southeast Asia (CASE) Programme, a regional initiative that aims to drive change in the power sector. CASE was launched in the Philippines last December 2021, with ICSC as its local expert organization and DOE-REMB as its political partner.
“We do not need new baseload power plants—we have enough. We need a system that is attuned to the kind of geography our country has. We need a modern grid that is able to adjust and support diverse, distributed generation,” Dalusung said.
ICSC had said that the country should brace for possible power supply shortage because the country is still dependent on coal power plants, which are “not performing as expected” and proven to be prone to outages.
“Because we have relied more on coal, we have reduced our energy self-sufficiency, which is why we are highly vulnerable to price volatility,” commented Atty. Jay Layug, senior partner at Puno Law Office and president of the Developers of Renewable Energy for Advancement Inc. (DREAM).
“The fuel prices in the global market directly affect prices of electricity, and it’s the consumers that bear the costs because we have a regulatory practice of automatic fuel price pass-through or ‘pasa-load.’ This needs to be removed as soon as possible, because it is unfair to the consumers,” Dalusung said. “Coal may have the notion that it is cheap, but it actually is very expensive. We have to look at the power situation holistically and we have to look at the facts—that renewables are cheaper and will continue to get cheaper,” he added.